The national median existing single-family home price increased 4% annually to $257,600 in the fourth quarter, according to the latest quarterly report from the National Association of Realtors.
Notably, this is moderately down from the annual increase of 4.8% in the third quarter of 2018.
Home prices increased all across the country, rising in 92% of measured markets in the fourth quarter, or 163 out of 178 metropolitan areas. About 8% of metros, 14 areas, saw price increases in the double digits. This is down from 10% of metros in the third quarter.
NAR Chief Economist Lawrence Yun said in light of the various hurdles for 2018, the close of the fourth quarter was promising.
“Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” he said.
Total existing home sales, including single-family homes and condos, decreased 1.8% from a seasonally adjusted annual rate of 5.27 million sales in the third quarter to 5.18 million in the fourth quarter. This is also down 7.4% from 5.4 million sales in the fourth quarter of 2017.
That being said, Yun believes the West needs more homes built.
“The West region, where home prices have nearly doubled in six years, is undergoing the biggest shift with the slowest price gain and large buyer pullback.”
According to NAR’s analysis, In the West, existing-home sales fell by 6.5% in the fourth quarter and are 13.9% below last year’s rate. The median existing single-family home price in the West increased only by 1.8% year over year to $383,100.
NAR’s report shows that at the end of the fourth quarter, there were 1.55 million existing homes available for sale across the country. This is 6.2% higher than the 1.46 million homes for sale at the end of the fourth quarter of 2017. The average supply of homes was 4 months during the fourth quarter, up from 3.5 months last year.
National family median income increased to $77,392 in the fourth quarter, but affordability fell annually. In order to buy a single-family home at the national median price, a buyer making a 5% down payment would need an income of $62,954. A buyer making a 10% down payment would need an income of $59,640 and for a 20% down payment a buyer needs to make $53,013.
“Housing affordability will be the key to sustained healthy growth in the housing market in the upcoming years. That requires more homebuilding of moderately priced homes,” Yun said. “Housing starts fell far short of historically normal levels, with only 9.6 million new housing units added in the past decade; compared to 15 to 16 million that would have been needed to meet our growing population and 20 million new job additions.”
“Local zoning law changes, expanding construction worker training programs at trade schools and promoting the use of tax breaks for developers in the designated Opportunity Zones will all play an important role in assuring an adequate future supply of housing,” Yun concluded.